Away from the Liverpool, the Eurozone crisis continues. Market confidence appeared to be
growing after European leaders sketched a debt recapitalisation deal for Greece over the weekend.
Shares in deeply exposed French banks rallied for 2 days when they were assured that their losses in Greece would be covered by the expanded EFSF.
But, 48 hours of gathering calm has been broken by news of a split over the fledgling debt deal (£). Domestic political pressure in Germany and Holland seems to have forced those countries to insist that private sector interests take their share of losses in Greece, a sign that these governments are reluctant to ask their taxpayers for money to sustain the single currency and, of course, bad bank debts. Stock markets have been shaken by the news, with French banks suffering particularly sharp falls: Soc Gen has shed 6.05 per cent and BNP Parisbas has lost 4.44 per cent at the time of writing.
This latest twist is yet another reminder, as if one were needed, that this crisis has revealed the scale of the EU’s structural political weaknesses. Action cannot be imposed; it must be collectively agreed by individual countries whose first loyalty remains to their citizens’ interests. The great European monolith, feared for so long by many across the continent, stands on inadequate foundations, quaking under its own stupendous weight. The Eurozone crisis is one example of that instability, the Schengen crisis (which has been under reported in this country) another.
The Eurocracy in Brussels recognises that it now faces an existential threat. This morning, Jose Manuel Barroso has said that the crisis is “the greatest in the EU’s history”.
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